Legal Problem 2: Consulting Engineers, Inc. (CEI) would like to raise $10 million in new capital to open new offices in China. The company believes it could raise the capital by selling shares of stock to its directors and executive officers, as well as to its bank and a large insurance company whose home office is located near CEI's headquarters. Opposition to the financing plan exists because of the trouble, time, and cost involved with registering with the Securities and Exchange Commission (SEC).
Advise CEI on some of the issues with the registration of the new issue of stock.
Legal Problem 3: Prada, Horvath, and Carmel were three physicians who saw the need for an urgent-care treatment facility in their community. They became limited partners in building a for-profit urgent-care facility. Each had a 10 percent interest in the partnership. Hospital Management, Inc. (HMI) the general partner with a 70 percent interest, had expertise in hospital construction, management, and operation. Prada, Horvath, and Carmel asserted that the managerial control of the partnership was undertaken and operated by HMI, as general partner, to the exclusion of them as limited partners. The urgent-care facility didn't do very well and the doctors claimed that their interest was a security, an investment contract, that gave them status to file a securities suit against the general partner under the 1934 act. The general partner disagreed.
Can Prada, Horvath, and Carmel bring an action against HMI? Why or why not?
Support your responses with appropriate cases, laws, and other relevant examples.